Category Archives: AML compliant

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Israeli Court Overturns Bank’s Refusal of Crypto-Related Transaction

Israel’s largest bank, Bank Hapoalim, has been found to have unlawfully blocked a money transfer of USD 195,00 coming from a European cryptocurrency exchange platform, citing unsubstantiated claims of suspected money laundering and terrorist financing.

The case was presided over by Judge Limor Bibi, who concluded that Bank Hapoalim did not have any substantial evidence to back up their accusations of the exchange platform, as reported by Coingeek. Furthermore, the client in question had even provided documents showing both evidence of the source of the funds and details of the transactions having been filed with the Israel Tax Authority.

Upon proof that the funds were AML compliant, Bank Hapoalim was obliged to facilitate the transaction. Although the bank requested a gag order to protect the bank from bad publicity, the court declined this appeal.

In a comment made by the complainant’s law firm, Doron, Tikotzky, Kantor, Gutman & Amit Gross, the growing friction between financial institutions and clients was noted. This can be attributed to the refusal of Israeli banks to cooperate professionally with clients dealing in cryptocurrencies.

The firm spoke out, saying: “Recently, we have witnessed an extreme escalation in the banks’ fight against Bitcoin and the other virtual currencies. In what appears to be a planned policy of targeted assassination, the banks are preventing their customers from returning foreign money originating in virtual currencies to their Israeli accounts, even though the clients wish to declare the movement of the funds and pay their taxes according to the law.”

The statement detailed the importance of setting a precedent that necessitates a policy of cooperating with virtual currency transactions that are AML compliant.

Bits of Gold v. Leumi Bank

Israel’s Supreme Court was forced to step in earlier this year in the case of cryptocurrency exchange Bits of Gold v. Leumi Bank. The court decision ruled in favor of Bits of Gold, declaring there was no solid ground for the bank to suspend the account in question. An order from the court was issued, temporarily prohibiting the bank from restricting the exchange’s banking services.

At the time of ruling it was appreciated as a landmark win for cryptocurrencies in the country, setting a precedent that prohibits banks from refusing services that are involved in crypto without cause. It appears, however, that the challenge from banks in Israel is far from over.

 

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